Gold prices experienced a significant surge in the early session yesterday, followed by a lack of substantial pullback during the midday. The price action, characterized by strong consolidation instead of a corrective decline, indicates minimal selling pressure. The market appears to be awaiting a catalyst for a secondary advance. The period between 1 and 3 PM often marks the activation of European session capital. As long as prices remained stable before this window, an upward momentum following the European open was highly probable. Consequently, entering long positions above the 4100 level during this afternoon timeframe was emphasized.
Contrary to expectations, the European session did not immediately break the morning's high but instead saw a downward retracement. This movement deterred many from entering long positions and even caused some existing longs to exit. The perspective maintained was that a retracement to the area above 4100 presented a buying opportunity, targeting a 50-dollar gain. Indeed, the price touched the 4107 zone and swiftly rebounded, confirming the robustness of the psychological 4100 support level. During the US session, prices extended gains to approximately 4166. The key takeaway is not to panic during a dip but to recognize it as a potential entry signal. This is the rhythm of the market; aligning with it allows profits to be secured steadily.
Following an overnight peak near 4166, gold prices have retraced, finding a temporary bottom around 4112 before rebounding. The critical low from yesterday's European session pullback was 4107. The current price stabilization above this 4107 low presents an opportunity to consider long positions. It is crucial to note that this 4107 level may be tested, and a brief intraday dip below it is not inherently problematic. However, a decisive break and close below this level would be a significant development. Such an event would signal a potential disruption of the short-term uptrend structure, possibly necessitating a deeper retest of support levels for renewed consolidation, leading to a more complex and volatile market phase.
Where to begin
For today's trading strategy, the primary approach is to look for long entries while the 4107 low holds. The core tactic remains buying on dips. A sustained move above the early Asian session high of 4140 during the European session would warrant additional long entries. Conversely, if the 4107 level is tested multiple times, it would be prudent to wait for a deeper pullback before considering new long positions. Potential support zones for such entries are around 4084 and 4076.
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